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Navigating M&A in 2026:Why Financial Due Diligence Matters More Than Ever

As merger and acquisition (M&A) activity continues to rebound, companies and investors are entering a market defined by both opportunity and increased scrutiny. While market conditions continue to evolve, one theme remains consistent: companies that are best prepared for diligence are often best positioned to maximize value and successfully close transactions.

At Centri, we are seeing organizations pursue acquisitions and strategic investments to accelerate growth, enter new markets, strengthen technology capabilities, and respond to changing competitive dynamics. Buyers are looking for assets that can help them scale more efficiently, while sellers are seeking to capitalize on renewed market activity and attractive valuation opportunities.

Despite this increased optimism, dealmakers continue to face a complex environment. Interest rate uncertainty, shifting regulatory priorities, evolving technology demands, geopolitical factors, and changing capital markets conditions all have the potential to influence transaction timing and structure. As a result, investors and management teams are placing greater emphasis on diligence, financial transparency, and risk identification before moving forward with a transaction.

Key Trends Shaping M&A in 2026

While every transaction is unique, several themes are influencing today’s deal environment.

AI and Technology-Driven Investment

Organizations continue to evaluate how artificial intelligence and emerging technologies can create competitive advantages. For many companies, M&A is becoming a strategic tool to acquire technology, talent, data capabilities, and infrastructure more quickly than building those capabilities internally.

As a result, buyers are increasingly focused on understanding not only a target’s historical financial performance, but also the sustainability and scalability of its technology investments.

Increased Private Equity Activity

Private equity firms continue to seek opportunities to deploy capital while also monetizing mature portfolio investments. This dynamic is creating both acquisition opportunities and an active market for sellers seeking liquidity events.

In this environment, buyers are conducting more rigorous diligence to validate earnings quality, cash flow generation, working capital requirements, and growth assumptions before committing capital.

Larger and More Complex Transactions

Organizations are increasingly pursuing transformative acquisitions to accelerate growth and reposition their businesses. These transactions often involve complex operating models, multiple business units, cross-border operations, and sophisticated financing structures.

As transaction complexity increases, financial diligence becomes critical to identifying risks, validating assumptions, and supporting informed decision-making.

Cross-Border and Strategic Expansion

Many organizations continue to look beyond their home markets for growth opportunities. Cross-border transactions can provide access to new customers, capabilities, and geographic markets, but they also introduce additional financial, operational, tax, and regulatory considerations.

Comprehensive diligence helps management teams understand these risks and evaluate whether the anticipated value creation opportunities can realistically be achieved.

Portfolio Optimization and Strategic Repositioning

Companies are increasingly using M&A to sharpen strategic focus, expand into attractive markets, and divest non-core assets. Whether pursuing acquisitions or evaluating a potential sale, organizations are under pressure to clearly articulate their value proposition and support it with reliable financial information.

These themes make preparation and diligence more important than ever.

Due Diligence Creates Value for Both Sides of the Transaction

In our experience, the most successful transactions are often the result of preparation long before a letter of intent is signed. Sellers who understand their financial story and proactively address potential concerns are typically better positioned to defend value. Similarly, buyers who conduct comprehensive diligence are better equipped to validate assumptions, identify risks, and structure transactions appropriately.

Whether preparing for a sale or evaluating an acquisition, organizations that enter the diligence process prepared are often better positioned to protect value and avoid surprises. While the specific objectives differ for buyers and sellers, financial due diligence provides the insights needed to support informed decision-making and successful transaction outcomes.

Seller Considerations

Sell-side Readiness

• Identification of long-term or short-term projects necessary to expand enterprise value
• Professionalization of financial function
• Cash to accrual conversion
• Identification, tracking, and analysis of Key Performance Indicators (“KPIs”)
• Development of a forecast model and evaluation of prospective value
• Preparation of management team and identification of gaps in leadership

Sell-side Financial Due Diligence

• Provides transparency and credibility with the financial information shared with buyers
• Reduces the risk of surprises surfacing during buyer due diligence, resulting in increased surety of closing and value retention
• Identification of issues that can be resolved or mitigated before the Company goes to the market (i.e., set the narrative)
• Preparation of Quality of Earnings often results in expansion of enterprise value
• Shortens the time needed between the execution of the letter of intent (“LOI”) and the signing/closing date

Buyer Due Diligence Considerations

• Evaluate the strengths and weaknesses of the target business
• Assess the quality and sustainability of earnings
• Assess normalized net working capital requirements
• Identify debt-like items and potential liabilities
• Evaluate key value drivers and transaction risks
• Validate assumptions underlying the investment thesis
• Identify financial considerations to address in transaction documents

How Centri Can Help

In today’s M&A environment, preparation can be the difference between realizing a transaction’s full value and encountering avoidable challenges during the deal process. Centri’s M&A Advisory team helps companies and investors navigate every stage of the transaction lifecycle, from readiness planning and financial due diligence to deal execution and post-transaction support. Leveraging deep experience across buy-side and sell-side transactions, we help clients identify risks, uncover value drivers, validate assumptions, and make informed decisions with confidence. Our financial, accounting, tax, and technology specialists work as an integrated team to deliver the insights needed to execute successful transactions and achieve strategic objectives.

James Hendershot

Managing Director | M&A Practice Leader | CPA

James is a Managing Director and the M&A Advisory Practice Leader at Centri Business Consulting. He has more than 19 years of experience in finance and accounting, including merger and acquisition consulting and FP&A experience.  He joined Centri in January 2024 and provides M&A advisory services to private equity firms, venture capital firms, family offices, and strategic/corporate clients. View James Hendershot's Full Bio